Having the right money conversations is critical to setting your relationship up for financial success.
Far too often, when money conversations do occur, they focus on practicalities (how to budget, paying off the wedding, or even saving for retirement) and overlook important topics that are foundational for a successful financial relationship.
One of the best indicators of marital discord is “financial disagreements”. Couples who “disagree about finances once a week” are over 30% more likely to get divorced than couples that report “disagreeing about finances a few times a month” according to a 2009 study by Jeffrey Dew at Utah State University.
Below are five questions every couple needs to ask when they merge their finances.
How Do You Want to Talk About Money?
Every person has a unique attitude toward money. For example, it takes me time to process financial decisions, even ones that may seem small to my husband! He, on the other hand, can make a financial decision in a split second and be ready to move on to the next thing. Since we recognize that we process financial decisions differently, we’ve created a system that works for both of us. I write out our budget and put together all the information needed to make a decision. Doing this gives me time to think through it all. By the time I sit down with my husband, we are both ready to make a decision.
If you’ve been struggling with even starting conversations about money, we have created a free guide for you to get started. Click below to download it now!
What Are Your Strengths Regarding Money?
We all have different strengths with money. One person may be the budgeting extraordinaire, while another is talented in finding the best deals. Some people may be good at spending money on things that bring lasting happiness, whereas others are known for their generosity.
Since money conversations can be frustrating, it’s critical that you recognize your partner’s financial fortes and allow them to utilize those strengths.
What’s Important to Us About Money?
Money conversations are never just about money. They are usually about the deeper values that we hold. For example, take the clothes that you’re wearing. Preferring to score finds at a thrift store versus the ease of shopping through Stitch Fix reflects values that you hold.
Talking about money means making decisions about values. Many money conversations have veered off course for this reason. It may seem like a simple decision to cut the entertainment budget, but there’s more to that choice than simply reducing numbers on paper.
Knowing what is important to you in the first place, what you value in relation to money, gives you a place to go back to when decisions are hard.
How Did Our Families Handle Money, and Do We Want to Be Like Them?
Whether we like it or not, our families are the first models of how to manage money. Most people default to how their parents handled money.
Talk with your spouse about how your parents handled money. Do you want your family’s finances to operate like that or do you want to do something different?
Having this discussion can give you a game plan for how you want to approach your finances. If you have a good relationship with your parents, you may consider asking them how they have dealt with their finances on an ongoing basis.
Finally, after you have those conversations, you must ask...
How Do We Want to Manage Our Money on a Monthly Basis?
This is where you start to get into the nitty gritty of handling money. It doesn't mean pulling out your spreadsheet quite yet; first, discuss the practical steps you want to take to manage your finances.
How often do you want to meet? When do you want meet? How long should your meetings be? Who wants to do what to prepare for the meetings?
Use these meetings to decide what tools you'd like to utilize for managing finances (budgeting spreadsheet, online personal finance programs, etc.). Revisit how they are working for you in future meetings and make changes as necessary.
As you come up with a game plan, it’s important to remember that there will undoubtedly be changes as time goes on and you enter different seasons in your life. Being flexible with each other is important to finding financial success in your relationship.
It’s Not an Easy Road, but It’s the Wisest One.
If you’ve found it hard to talk about money with your future spouse, you’re not alone. A COUNTRY Financial survey from May, 2011 found that only 51% of couples discussed how they would manage money before tying the knot. Avoid becoming a couple who falls into another statistic, one that shows finances are the leading cause of stress in relationships (SunTrust Bank, 2015) by having the hard money conversations early. They can be tough, but they lay a strong foundation that will put you on the right track for financial success.